IRS RESPONSE TO RECOMMENDATION: IRC §§ 7431, 7213 and 7213A are statutory provisions establishing civil and criminal penalties for the unauthorized disclosure of returns and return information. The IRS lacks authority to expand these provisions to disclosures made with respect to whistleblower administrative proceedings under IRC § 7623. Additionally, the majority of whistleblower claims are rejected or denied within the first two years after submission. Requiring the execution and processing of confidentiality agreements upon submission of a Form 211 and administering compliance with the safeguarding requirements of IRC § 6103(p) would significantly increase burdens on the Whistleblower Office.
The IRS does agree with the NTA’s legislative recommendation to make unauthorized disclosures of return information by whistleblowers subject to civil and criminal penalties under IRC §§ 7431, 7213 and 7213A and to extend the IRC § 6103(p) safeguarding requirements to whistleblowers. Treasury has made similar recommendations as part of the Administration’s Revenue Proposals for fiscal years 2014-2017.
CORRECTIVE ACTION: N/A
TAS RESPONSE: The IRS does not explain why it lacks authority to revise the regulations to make whistleblowers subject to statutory penalties and safeguarding requirements, but does state it does not agree these statutory provisions should be activated upon execution of confidentiality agreements submitted with Form 211. The IRS appears to be concerned with additional administrative burden, but it is not clear how simply requiring and accepting an additional form from whistleblowers creates significantly more burden. The information the IRS would provide pursuant to the agreement could be decided on a case by case basis, depending on what stage the case is in. Thus, not all confidentiality agreements would require the same level of administrative attention or enforcement. Moreover, as the IRS notes, since 2007, information received by the IRS from whistleblowers has resulted in collections of over $3 billion dollars in additional tax revenue. More frequent and detailed communications between whistleblowers and the IRS which a confidentiality agreement would permit would lead to improved quality of whistleblower submissions as whistleblowers and their counsel learn what kinds of information the IRS finds useful and how that information is best presented. Better submissions would lead to even more collections on the basis of whistleblower information. Thus, it is not clear that any additional administrative costs of requiring confidentiality agreements would outweigh the benefits of adopting this recommendation.
ADOPTED, PARTIALLY ADOPTED or NOT ADOPTED: Not Adopted
OPEN or CLOSED: Closed
DUE DATE FOR ACTION (if left open): N/A